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Tuesday, 01/30/2018 9:11:54 AM

Tuesday, January 30, 2018 9:11:54 AM

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Sunworks CEO says tariff unlikely to stop new solar installations

By Mark Anderson – Staff Writer, Sacramento Business Journal

A new tariff imposed by the Trump administration on imported solar panels is likely to add up to 5 percent to the cost of commercial solar-installation projects and up to 10 percent on residential projects, which is probably not enough to keep new commercial solar projects from being developed, the CEO of Roseville-based solar company Sunworks Inc. told the Business Journal.

The tariffs, announced Monday, were long expected and turned out to be far less than the solar industry had been bracing for, Sunworks (Nasdaq: SUNW) CEO Chuck Cargile said.

“The final resolution is not as bad as had been feared,” he said.

Sunworks shareholders appear to have been relieved, as the company’s stock rose 12 cents, or 10.7 percent, to $1.24 on Tuesday. Sunworks is the Sacramento area’s third-largest publicly traded company.

The Trump administration is imposing a 30 percent tariff on solar panel components, with the rate declining over four years, according to the U.S. Trade Representative.

The action is being taken at the urging of domestic solar component manufacturers, including Suniva Inc. and Solarworld Americas Inc., Reuters reported. The domestic manufacturers have argued that they can’t compete with a flood of Chinese imports that have driven down solar panel prices by 30 percent since early 2016.

The domestic manufacturers had reportedly sought a 50 percent tariff, the highest allowed under the law.

The 30 percent tariff that the administration chose to impose is likely to “lead to a low single-digit increase” in the price of commercial projects, Cargile said.

About 70 percent of Sunworks’ revenue comes from commercial, agricultural and government work, with residential accounting for 30 percent, he said.

What’s more, the tariff will decline to 25 percent in its second year, 20 percent in the third and 15 percent in the fourth. Also, the tariff only kicks in after the first 2.5 gigawatts of panels have been imported each year.

“The certainty of what the tariff is now is more of a positive than the tariff is a negative on projects,” he said. “We may see unlocking of projects now that the decision has been made.”

Cargile’s and Sunworks shareholders’ reaction to the tariffs contrasts, however, with that of solar industry representatives.

The Solar Energy Industries Association, a Washington, D.C.-based industry trade group, estimates the tariff “effectively will cause the loss of roughly 23,000 American jobs this year, including many in manufacturing, and it will result in the delay or cancellation of billions of dollars in solar investments,” according to a news release.

Sunworks buys panels manufactured in China, Korea and Malaysia, but the lion’s share come from China, Cargile said.

He said he doesn’t expect the tariff to significantly boost the domestic solar panel manufacturing industry.

“Starting a manufacturing facility is a non-trivial task, and getting it open would be at least a year or two down the road, and by that time the tariff is decreasing,” Cargile said. “I don’t see how you get a payback on investment.”